Facebook: The Sorry Company

Earlier this month, Facebook CEO Mark Zuckerberg apologized to Congress for allowing improper access to the data of tens of millions of Facebook users. This was just one of a long sequence of apologies that Zuckerberg has made for this and other failures of the social media giant.

Given this track record, it’s probably will not the last apology that Zuckerberg has to make for his company. It is long past time for Congress to take action so that Zuckerberg does not have to keep asking for our forgiveness. There are several simple steps the government can take to help him and his company in this area.

The first is to try to give Zuckerberg some competition. Facebook has an effective monopoly on the sort of social media platform it provides with no competitor having a reach that is even within an order of magnitude of Facebook’s. In fact, when Zuckerberg was asked during his testimony who his competitors were he stumbled blindly and eventually suggested email.

The government can certainly force the company to end its practice of buying up potential competitors. In the last decade, Facebook bought up both Instagram and WhatsApp, with the explicit purpose of eliminating potential competition. This is pretty much a textbook violation of anti-trust law in the United States, but the Obama administration chose to look the other way.

In addition to preventing Facebook from buying up potential competitors, the government can also prevent the company from using its near monopoly as a way to ply its way into new markets. This was the initial remedy proposed by the judge when Microsoft lost an antitrust case in the 1990s.

The judge ruled that Microsoft would be able to keep its near monopoly in the computer operating system market, but it would have to break off from its other divisions and would be prohibited from entering new markets. A new judge later reversed this ruling, but it would be a great precedent to apply to Facebook.

The second issue with Facebook is its tendency to pass on news items from phony sources. This turned out to be a big issue in the 2016 presidential campaign. Millions of people received fake news stories that were passed on from phony sources.

The best remedy for this problem would be to follow a practice now used for the enforcement of copyright law. The Digital Millennial Copyright Act (DMCA) requires websites to promptly remove material from their site after they have been notified of the alleged infringing material by the copyright holder. If they fail to do so, the website owner can face thousands of dollars of punitive damages for each act of infringement.

The comparable requirement for Facebook would be that it would have to promptly notify recipients of fake news after it has been called to their attention. If there were punitive penalties for failing to issue corrections that were comparable to those in the DMCA, it would give the company a strong incentive to limit the spread of fake news.

Finally, there is the problem that Mr. Zuckerberg was testifying to Congress over, the misuse of personal information that is collected through the system. The best remedy here is one that was suggested by the reporter and columnist David Dayen: simply ban individualized advertising.

As it stands, Facebook’s great value is that it can narrowly target advertising based on its extensive knowledge of the interests and habits of its users. It knows what music you like, where you travel, what movies you see. It knows how much you use Facebook and at what times. It also likely knows what you are doing during your downtime from Facebook.

The best way to discourage Facebook and other companies from learning every detail about our lives is to take the money out of it. If they are prohibited from doing individualized marketing, they have no incentive to collect the data.

While Facebook will undoubtedly whine about its free speech rights being violated, it doesn’t have much of a case. The courts have long accepted that commercial speech can be regulated; for example, we ban cigarette and alcohol ads from television. A ban on individualized advertising would be in the same vein.

This sort of ban would fundamentally change the Facebook model, but that is not the public’s concern. Presumably, Zuckerberg and his team will be able to adapt to the new rules, but if not, that’s capitalism.

An advantage of this sort of ban would be to increase the value of traditional advertising. Companies would again value placing ads in newspapers, magazines, or websites that they knew influenced a particular segment of the market. That might not be as cost effective for them as Facebook’s individualized targeting, but if such targeting is prohibited, going the old-fashioned route will be the best they can do.

These three measures together will undoubtedly make Facebook a much smaller company. But it will also be a much better company. If such measures get implemented quickly, we might even have seen our last Mark Zuckerberg apology.